Venkatesh Babu, chief executive
officer of Vennarsoft Technologies, a
Bangalore-based medical transcription
company, is no stranger to the vagaries
of the medical transcription market. He
was in for a rude awakening when the
product he had designed for the medical
transcription market—Stenoscription
—found no takers.“We had entered the
market primarily as a product company.
However, that was the time when
medical transcription companies in
India started going bust. But we insured
ourselves against this possibility by
entering the actual transcription
business in a small way,” Babu says.
Vennarsoft now counts among its client
list 14 veteran hospitals on the East
Coast of the U.S.

So what went wrong?

Firms entered the market thinking this
was a cost-driven opportunity. “The
cost advantage alone would not sustain a
company in the long run. Investments in
training and quality and productivity
improvements over a long time frame
were required for success.Moreover, no
investments were made in customer
acquisition. Those companies that
invested in the business for the long term
are surviving. The others have had to
close shop,” Suresh Nair, chief operating
officer of HealthScribe India, points out.

“The biggest problem with many
companies here was that they were in it
for a fast buck.They considered this just
another ‘stenography’ job. So when the
cost advantage did not bring them
business, they were ill prepared to scale
up. So they had to close,” Babu explains.

Changing Sentiments

Market volatility has lead to depressing
snetiments—a reason why hardly any
company has sought an IPO.Apart from
a few companies in Mumbai and
Hyderabad, none of the 100 odd
companies that survived the slowdown
has gone public—and for good reason,
too. “When the industry was heralded as
a sunrise industry, people weren’t too
worried about an exit strategy. And by
the time companies started taking
losses, the market was too depressed
even to consider an IPO,” says Babu.

But the sentiment is changing.
People are now beginning to realize that
there is nothing fundamentally wrong
with the industry. “Earlier VCs were
wary about funding transcription
companies,” Babu explains. “But now, I
have people who have expressed their
willingness to invest in my expansion
plans. An IPO is certainly something we
have in mind. Two or three years from
now, we expect enough liquidity to
warrant an IPO.”

But for now, Babu is content with
expanding his business. “I am looking at
acquiring a U.S. company that generates
about 100,000 lines of transcription per
day. That is perhaps the easiest way for
customer acquisition,” he adds.

Complexity

Most medical transcription companies
place a high premium on quality
assurance. “We are working on difficult
work types because we have been able
to convince our customers of the
quality of our process and people,” Nair
says. In medical transcription, quality
assurance must be an ongoing process.
“If the customer sees good quality on a
continual basis he will be willing to
trust you with more work regardless of
its complexity,” Nair says.

All said and done, Nair concedes
that U.S. transcription companies enjoy
a distinct advantage over Indian
outsourcers. “It is significantly tougher
for Indian outsourcers than for
companies based in the U.S.When you
already have a front-end mechanism in
place, the company’s processes are not
an issue, as far as potential clients are
concerned.All the company has to do to
address these concerns is to establish
not just the viability but also the quality
processes of the Indian wing.”

Babu agrees,“For offshore transcription
centers, India offers only a significant cost
advantage. But for companies like ours,
we had to focus not only on the processes
but also in setting up marketing offices in
the U.S. And investors are not very keen
on funding to set up a sales force. They
are more concerned with the technology
and the processes.”

Babu and Nair hope that brighter
days are ahead. But at least, they no
longer have to do the groundwork to
dispel perceptions that India is not a
viable outsourcing destination, as the
Indian eCRM companies and software
houses have helped to do that. Stringent
quality checks and productivity skills
are more critical elements that will
decide their future survival.